Benefits of Tax-Deferred Savings With an Annuity

Annuities are unique, retirement savings products that can provide you with tax deferral and the potential for lifetime income. Here’s how:

As you get closer to retirement, you need to keep a sharp lookout for ways to protect your savings from taxes and inflation. Tax-deferred savings with an annuity offers a range of lifetime benefits depending on the annuity you choose. Among them are:

Tax-deferred investment growth. Any gain or interest in an annuity can grow without taxation until you withdraw it — typically after retirement, when most people have a lower tax rate.

No IRS contribution limits. Unlike Individual Retirement Accounts (IRAs), 401(k) plans, and other tax-qualified plans, there’s no limit from the IRS on the amount of money you can put into an annuity.

No mandatory withdrawals. Unlike some qualified retirement accounts, you are not required to begin receiving payments at age 70½. Keep in mind, however, that annuities owned within a Traditional IRA are subject to the required minimum distribution rules. (Contract terms may require you to start taking withdrawals at a certain age, such as 95.)

Simpler estate planning. In some situations, you can bypass probate so your annuity proceeds go directly to your beneficiary upon your death.

The benefits of tax-deferred savings with an annuity are most applicable if:

You are in your 50s or 60s and preparing for retirement.

You are making the maximum allowable contributions to your other tax-advantaged retirement savings options, such as your 401(k) or IRA.

Guarantees are based on the claims-paying ability of the issuing insurance company. Guarantees apply to minimum income from an annuity; they do not guarantee an investment return or the safety of the underlying funds.

Each annuity feature may incur additional cost.

Taxable distributions (and certain deemed distributions) are subject to ordinary income tax, and if made prior to age 59 1/2 also may be subject to a 10% federal income tax penalty. Early surrender charges also may apply.

Variable annuities are long-term investments suitable for retirement funding and are subject to market fluctuations and investment risk.

Fixed annuities may have a higher initial interest rate, which is guaranteed for a limited time period only. At the end of the guarantee period, the contract may renew at a lower rate.

Wells Fargo & Company and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors to determine how this information may impact your own situation.

Retirement Professionals are registered representatives of Wells Fargo Advisors, LLC. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company. Discussions with Retirement Professionals may lead to a referral to Wells Fargo Advisors’ affiliates including Wells Fargo Bank, N.A. Wells Fargo Advisors and its associates may receive a financial or other benefit for this referral.

Insurance products are offered through non-bank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies. Not available in all states.